FATCA - Foreign Account Tax Compliance Act
- Published: 17 July 2014
HR 5016 – you never heard of it? It's the "Financial Services and General Government Appropriations Act, 2015" so it is important. It passed the House on July 16 and will now have to pass the Senate. There is an amendment to the bill that concerns us as Americans living overseas: it has to do with FATCA, of course. A cost-benefit analysis was never done and it turns out, as is no surprise to AARO, that implementation is expensive, perhaps costing more than the tax income it might generate. On July 14, Congressman Bill Posey (FL-8) proposed an amendment to HR 5016, H.Amdt. 054, which passed on a voice vote. In the Congressional Record,Congressman Posey is reported as saying:
"My amendment transfers $1 million from the Internal Revenue Service enforcement division to the IRS office of the Inspector General. It is my intent that this money be used to study the impact of IRS nonresident alien bank account reporting and requirements on the United States economy."
The amendment has received support from the Credit Union National Association, which said, "We believe this study is necessary given the complexity of implementing FATCA, the complex rulemaking that has taken place, and the myriad unintended consequences of the law on U.S. financial institutions and U.S. citizens living abroad." (For the full text of the CUNA letter, click here)
The Republican National Committee has passed a resolution to repeal FATCA. There is a movement initiated by Republicans Overseas for legal action against FATCA, led by Jim Bopp. Democrats Abroad support a "same country exemption" for accounts in the taxpayer’s country of residence.
AARO has voiced its objections to FATCA in successive meetings with the IRS, Treasury, and the Joint Committee on Taxation since it first came up in 2009 and passed in 2010. We have supported the concept of Residence-Based Taxation, and until that objective is attained, support the "same country exemption" as a compromise between full implementation and repeal, which we believe will not succeed in the current Congressional dynamic. Should an economic study confirm that FATCA implementation is too expensive to proceed, effectively stopping it, it would be good news. However, many other countries have jumped on the “financial transparency” bandwagon and the OECD has come up with its own financial data exchange standard (CRS). In this climate, we must be vigilant in ensuring that our concerns as Americans residing overseas be addressed in all future reiterations of FATCA and FATCA-like legislation.